TEXTILE INDUSTRY IN INDIA

May, 2014

Introduction

The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a vital role through its contribution to industrial output, employment generation, and the export earnings of the country.

The sector contributes about 14 per cent to industrial production; 4 per cent to the country’s gross domestic product (GDP); 17 per cent to export earnings. It is the second largest provider of employment after agriculture and provides direct employment to over 35 million people. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation.

Market Size

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. Abundant availability of raw materials such as cotton, wool, silk and jute and skilled workforce has made India a sourcing hub.

The most significant change in the Indian textile industry has been the advent of man-made fibres (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production increased by 6 per cent during December 2013. The production increased by about 4 per cent during the year April-December 2013.

Cotton yarn production increased by 6 per cent during December 2013 and by 10 per cent during April-December 2013. Blended and 100 per cent non-cotton yarn production increased by 5 per cent during December 2013 and increased by 8 per cent during the year April-December 2013.

Cloth production by mill sector increased by 4 per cent during December 2013 and by 6 per cent during April-December 2013. Cloth production by handloom, and hosiery increased by 3 per cent and 11 per cent respectively during December 2013. Production by handloom, and hosiery sectors increased by 4 per cent and 13 per cent during April-December 2013. The total cloth production grew by 2 per cent during April-December 2013.

The potential size of the Indian textile and apparel industry is expected to reach US$ 221 billion by 2021, according to Technopak's Textile and Apparel Compendium 2012.

Garment exports from India is expected to touch US$ 60 billion over the next 3 years, with the help of government support, said Dr A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC).

Investments

The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investments (FDI) worth Rs 6,428.18 crore (US$ 1.03 billion) during April 2000 to November 2013.

Some of the major investments in Indian Textile Industry are:

Sutlej Textiles and Industries, one of the largest yarn, fabric, garments and home textiles manufacturers in India plans the expansion of its Jammu and Kashmir (J&K) manufacturing unit with an investment of Rs 1.75 billion (US$ 28.10 million).

Superdry plans to open 20 stores in India over the next five years, as per Mr James Holder, Founder, Superdry

The Aditya Birla Group has signed an in-principle agreement to buy the assets of Ontario-based Terrace Bay Pulp Mill for Rs 605 crore (US$ 97.14 million). The acquisition would be carried out through AV Terrace Bay (Canada), a special purpose vehicle (SPV) in which two group companies, Grasim Industries and Thailand-based Thai Rayon Public, would hold stake

Tommy Hilfiger plans to add 500 stores in India over the next five years as part of their expansion spree

Canclini Tessile plans to tie up with Tirupur-based Emperor Textiles to stitch its shirts in India. The equal joint venture (JV) with Emperor Textiles will set up a separate manufacturing unit in Tirupur to manufacture Italian fabric for domestic consumption

Government Initiatives

The Government of India has promoted a number of export promotion policies for the Textile sector in the Union Budget 2011-12 and the Foreign Trade Policy 2009-14. It has also allowed 100 per cent FDI in textiles under the automatic route.

Due to policy measures initiated by the Government in the recent past, the Indian textiles industry is in a stronger position than it was in the last six decades. The industry which was growing at 3-4 percent during the last six decades has now accelerated to an annual growth rate of 8-9 per cent in value terms.

The Government has also allowed 100 per cent FDI in the sector through the automatic route. In the 12th Five Year Plan (2012–17), the government plans to spend US$ 9.1 billion on textiles as against US$ 4 billion in the 11th Plan.

Some of initiatives taken by the Government to further promote the industry are as under:

Encouraged by turnaround in the textile exports, the Government of India plans to set up a US$ 60 billion target for the next financial year, a jump of over 30 per cent from the current financial year. For the current fiscal year, government has set a target of US$ 43 billion.

The Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with a corpus of Rs 500 crore (US$ 80.25 million) to make textile processing units more environment-friendly and globally competitive.

Hyderabad is all set to have yet another national centre – a Rs 100 crore (US$ 16.05 million) National Institute for Footwear Design and Development. The Government of Andhra Pradesh has already allocated the required land at Gachibowli in Cyberabad.

The Government of India plans to set up a Rs 100 crore (US$ 16.05 million) venture capital fund to provide equity support to start-ups in the textile sector, in order to encourage innovative ideas in this export intensive sector.

Under the Technology Upgradation Fund Scheme (TUFS), the cotton textile industry of India will receive margin money from the Ministry of Finance. The industry is also expected to attract Rs 4,000 crore (US$ 642.28 million) in the form of investments over the next six months.

The Government of India has allotted Rs 700 crore (US$ 112.39 million) in the next Five Year Plan for the development of technical textiles. In 2012–13, the technical textiles industry reached Rs 7.48 trillion (US$ 120.12 billion) at an annual growth rate of 3.5 per cent.

Road Ahead

The textiles industry complements the growth of several industries and institutions such as the defence forces, railways, and government hospitals, which are the key institutional buyers of technical textiles. The market is expected to grow to US$ 31 billion by 2020, at a compound annual growth rate (CAGR) of 10 per cent. The industry includes production of flexible packaging material for industrial, agricultural and consumer goods. Among the other segments, protech, oekotech, spotech and geotech have significant growth potential. India’s technical textile industry is an emerging area for investments with good growth opportunities.

With the increase in investments in the Indian textile sector, the subsequent increase in the industrial production, and the positivity observed by the textile sector have resulted in progress and development of the sector. Integrating the sectoral needs with technical advancements will completely modernise the industry chains across the country, along with continued investments assisting in reaping benefits for the Indian textile sector.

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